Miyazawa Fund for PAL Rehab

The Filipino Monitor

Thursday, December 24, 1998

Business News

MANILA – The government is eye­ing the possible use of the Miyazawa Fund initiative from Japan in its bid to rehabilitate the debt-strapped Philippine Airlines (PAL).

Finance Secretary Edgardo Espiritu said the government may take this op­tion if there continues to be no progress in negotiations by PAL with prospective foreign investors.

Espiritu said using the Miyazawa fund for corporate debt restructuring has been done in other Southeast Asian coun­tries such as Thailand and Indonesia.

Considering the importance of PAL as flagship carrier, we're now looking under the Miyazawa initiative a support for corporate debt restructuring," he said.

The finance chief told reporters the Miyazawa option would involve offer­ing PAL shares to the public, not only to the present stockholders.

The Miyazawa fund initiative is a $30 billion Japanese aid program for crisis-hit economies in the region. It was named after its proponent, Japanese Finance Minister Kiichi Miyazawa.

When asked how much of the Miyazawa fund the government aims to tap, Espiritu said "we are looking at the $150 million requirement for PAL to become viable so we will go up to $150 million."

He said the terms of the loan will have to be negotiated with the Japanese government, particularly with the Japa­nese Export-Import Bank and the Over­seas Economic Cooperation Fund.

Espiritu also said the request to use the Miyazawa fund must come from the government task force studying PAL's rehabilitation, the Securities and Ex­change Commission (SEC), and the PAL management.